Health Advocates Push for Medicare Benefit Change

Rivlin supports creating a combined deductible for Medicare Parts A and B. The Obama administration and lawmakers have expressed interest in the idea.

Health care stakeholders complain that some of Medicare’s benefit structure is still stuck in the 1960s, when the program was created. As lawmakers search for ways to reduce government spending, many are looking to find savings by bringing all of Medicare into the current century.

One way to update Medicare would be to create a combined deductible for Medicare Parts A and B, an idea that comes up from time to time. The Obama administration and Republicans both have shown support for it, although early takes on the president’s budget, to be released Wednesday, suggest he’s not putting it on the table just yet.

Unlike almost all private insurance plans, Medicare currently has separate deductibles for different kinds of medical services. That can be confusing for beneficiaries and does not encourage them to get the most efficient care.

Creating a single uniform deductible for services under Parts A and B would modernize Medicare and make it easier for beneficiaries to get cost-effective care, supporters of the idea say.

“It’s not a major item, but if you’re trying to modernize Medicare, the fact that we have two separate deductibles for Part A and Part B is just something that seems like that it would be simpler if we didn’t,” said Alice Rivlin, a former Clinton budget director and co-chairwoman of the Bipartisan Policy Center’s Debt Reduction Task Force.

But how much would such a move save Medicare? What are the odds that lawmakers would rally behind it? And what do these different parts cover anyway?

What Are the Programs?

Medicare Part A covers inpatient hospital services, while Part B covers outpatient and physician services. Almost all Medicare beneficiaries are enrolled in both parts, with about 7 percent participating in only one, according to the Medicare Payment Advisory Commission.

Currently, the programs have two separate deductibles, as well as different copayments and cost-sharing charges. The deductible for Part A services is relatively high and was $1,156 in 2012, according to MedPAC. For Part B, the deductible was a relatively low $140 in 2012.

The separate deductibles make Medicare different from most private insurance plans, which now have a single deductible for medical services. Medicare, on the other hand, reflects the insurance industry norms of the era when it was created.

“This structure of having two distinct parts is mainly historical, reflecting the structure of private insurance as it existed in the 1960s,” MedPAC said in a June 2012 report.

Rivlin said that creating a single combined deductible for medical services would be “fixing a problem that shouldn’t have occurred.”